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Building the Hydrogen Economy: An Infrastructure Strategy
Dr. Robert K. Dixon Head, Energy Technology Policy Division International Energy Agency Paris, France
Statement of Work Period of Performance March 2007-December 2008
Background. Considerable progress towards the vision of a global hydrogen economy has been achieved in recent years. Large-scale, long-term research, development, demonstration and deployment investments to advance hydrogen and fuel cell technologies have been realized in the public and private sectors (IEA, 2004). Yet, decades of work remain, including the unfinished business of developing an infrastructure for the hydrogen economy, if the research and development successfully meets consumer demands and makes a business case. To date, over 400 significant hydrogen and fuel cell technology demonstration and deployment projects in the distributed energy and transport sectors have been funded and constructed around the world (IPHE web site). Many of the early transport projects have focused on hydrogen production facilities, hydrogen fueling stations for vehicles, and vehicle/fleet trials. A fair number of hydrogen highway projects have been announced, planned or are under construction in North America, Europe and Japan. An equally robust number of demonstration and deployment projects have been realized in the distributed energy sector, including recent announcements to build two 500 MW hydrogen fueled power plants in the US and the UK. Public-private partnerships are the foundation for most of these activities. Most OECD countries and a handful of developing countries employ hydrogen and fuel cell technology roadmaps to guide their investments. These roadmaps have proven highly valuable in coordinating public and private sector research and development investments in hydrogen and fuel cell technologies. The transition of hydrogen and fuel cell technologies from the laboratory to the marketplace has many barriers. The relatively slow capital stock turnover in the energy sector and the long lead time required for energy sector infrastructure investments requires careful planning. Some countries have begun strategic planning of future hydrogen economy infrastructure investments. Strategic planning for the hydrogen economy seems especially important given current energy security and economic prosperity goals of OECD and non-OECD countries. Strategic planning, via public-private partnerships, can be useful in sending appropriate signals to the marketplace. This project will build on the solid foundation established by complementary activities in Europe, Japan and the US. HyWays, an integrated project, co-funded by public and private sector institutions links technology databases, socio-economic analysis and
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stakeholder developed scenarios of future hydrogen systems in Europe. Complementary analytical activities in Japan have led to development of technology roadmaps and strategic plans for development of hydrogen power systems stationary and mobile applications. A preliminary scenario analysis, based on several analytical tools and stakeholder guidance, has been completed for development of transport sector hydrogen and fuel cell technologies for the US. Other IEA and IPHE member countries have also begun making investments in this arena. The challenge ahead is linking these national or regional activities using common methodologies and tools, as well as, augmenting the analysis for key developing and OECD countries. An integrated and comprehensive portfolio of strategies and policy instruments, representing key economies around the world, will help enable an efficient transition to a hydrogen economy. Governments, via public-private partnerships, can play a critical role in nurturing market introduction of new technologies using policy levers and stimulation of market niches. This strategy includes developing fuel cell manufacturing technologies, hydrogen and fuel cell market and capital investment analysis, and facilitating early adopters. Early opportunities such as fuel cells for portable applications, forklifts, airport hauling equipment and small stationary applications may be used as stepping stones to get hydrogen fuel cells to the mass production market. Such options can help in the technology learning process and they can help to establish sufficient public acceptance. The potential of tax credits, regulations and other policy instruments that would benefit hydrogen fuel cell vehicles needs to be analysed at a national, regional and global scale. Objective: The overall objective is to convene public and private sector officials in an international strategic process to evaluate transition planning scenarios for the expansion of infrastructure for the hydrogen economy and to inform policymakers on opportunities to accelerate these transition plans through policy instruments. Common methodologies and tools will be used to link existing analyses and additional analyses will be undertaken for key economies (e.g., China, Brazil, and India). Specific sub-objectives include:
1. Convene public and private sector officials in an international strategic dialogue to refine and evaluate infrastructure transition planning scenarios for building out the hydrogen economy; 2. Using the IEA Energy Technology Perspectives (ETP) model and other proven tools, quantitatively analyze hydrogen economy scenarios and market transformation planning for key countries and the world out to 2050; and, 3. Inform policy makers of opportunities to effectively advance these transition scenarios and strategies plans policy instruments.
Proposed Tasks: The strategic planning tasks would build and summarize lessons learned from early public and private sector investments in the hydrogen economy infrastructure, as well as, lay out a vision and pathway for future investments and development activities. This project will build on prior analysis and strategic planning efforts at the IEA, IPHE, Asia Pacific Economic Cooperation (APEC) and in individual countries (e.g., HyWays in Europe). The IEA and IPHE are uniquely positioned to successfully lead and implement this activity.
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Two major tasks are proposed: 1) Convene three dialogue and scenario development workshops of key hydrogen economy infrastructure actors from the public and private sectors (e.g., hydrogen highway teams, fueling station teams, China Olympics team, merchant H2 industry, the transport sector, distributed energy sector, other early investors, the finance community, the energy construction community, others). Key H2 infrastructure actors/leaders will offer an update on their specific projects and a candid analysis of past lessons learned and their future plans. We will engage these actors in strategic planning break-out groups and consider key infrastructure development questions. Current and future barriers and opportunities would be explored at the workshops. Scenarios, assumptions and data for the analytical phase of this project will be developed and refined. The outputs from the lessons learned, scenario development and strategic planning sessions will be compiled, reviewed and edited. It is anticipated workshops will be convened in Europe, North America and Asia since strategic planning and scenario development has a regional flavor. High quality glossy, color reports from each of the workshops will be produced (see Annex III, Project Deliverables). This task will be coordinated with the IPHE Demonstration and Infrastructure Task Force, allied IEA and IPHE activities, and complementary activities in Europe, Japan, the US and other national efforts. 2) Employ global energy technology optimization analysis and transition planning models, such as the IEA Energy Technology Perspectives (ETP) Model, to analyze various infrastructure investment and hydrogen economy development scenarios. The ETP model is a MARKAL type model, refined over the past 25 years, produces longterm (e.g., 2050) analysis, is a least-cost decision making model, has full coverage of the energy system (supply and demand side), has a 1000+ technology database, and has footprints in 15 model regions around the world. Other countries will have the opportunity to contribute their transition planning activities and their analytical tools. We propose to collect data at the three strategy workshops to better calibrate ETP and offer best advice on H2 economy infrastructure investments. This analysis will emphasize the global outlook. Special attention will be focused on transition modeling. Scenarios and strategies for individual countries could be produced by the participants, based on the data and model analysis. This approach will enable proper accounting of the specific country characteristics and needs. Analysis recently completed in Europe, Japan and the US will not be repeated. Rather, common tools and methodologies will be used to integrate and link these national or regional activities. Considerable effort will be devoted to building scenarios and analysis in Brazil, China, India and key countries where there is a dearth of information. A major IEA-IPHE publication, in the form of a book will be produced that synthesizes and summarizes all workshop dialogues (Task 1) and the quantitative analysis activities (Task 2). See Annex II Project Deliverables, for a complete list of deliverables. Analytical issues that need further attention include: • How fast can R&D and deployment programmes reduce the cost of a hydrogen infrastructure and hydrogen fuel cell vehicles?
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• • • • •
How much government funding would be needed in a transition phase, and how can this funding be minimized and used as efficiently as possible? What would be the optimal balance between R&D and deployment programmes? To what point must R&D be conducted before deployment? How should uncertainty in future hydrogen quality needs in terms of purity and pressure be dealt with in infrastructure development? What are the true costs of a hydrogen transmission and distribution system; can existing gas pipelines be used for hydrogen? Early decentralized production is either based on gas reforming or electrolysis at the city-gate. In fact, electrolysis uses a hydrogen fuel cell in reverse mode. Could development of such electrolysis cells help to reduce FCV costs, and should they therefore be preferred over gas based supply systems? What are the prospects for higher temperature PEM fuel cells, and how would they affect the choice and timing of a hydrogen infrastructure? How would FCV niche markets and hydrogen ICEs affect the need for a hydrogen infrastructure, and what would it mean for the infrastructure timing?
The recent IEA publication, Prospects for Hydrogen and Fuel Cells, demonstrates the power and effectiveness of these global analytical tools (IEA 2005). A major IEA-IPHE book that contains scenarios, original analysis of infrastructure development and strategies to implement will be produced in late 2008. The project will be implemented by a team of officials from the IEA Secretariat, IPHE Secretariat, US Energy Association and other key stakeholders. The U.S. contribution to this activity is $100,000 USD or 70,000 EUROs. Some project costs and activities will be supported or augmented by voluntary contributions from other countries and the private sector. References Cited: IEA. 2004. Hydrogen and Fuel Cells: Review of National R&D Programs. IEA, Paris, France. IEA. 2005. Prospects for Hydrogen and Fuel Cells. IEA, Paris, France.
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Annex I: Workshop outline Each workshop (North America, Europe and Asia) is a 2-day activity, split into four sessions. The structure of the three workshops is the same but the discussion will focus on the specific regional characteristics. Session 1 Specific projects: lessons learned and future plans. Session 2 Transition pathways: technology learning, niche markets, technology spillover effects, infrastructure development issues. Session 3 Policy issues: balancing of R&D and deployment programmes, supply security and environmental policies, the use of regulatory and financial support measures. How to develop a hydrogen infrastructure in an urban environment. How to accommodate uncertainty in technology portfolios. Session 4 Hydrogen scenarios: technology characteristics, consumer preferences, competing options (biofuels, plug-in hybrids), policy programmes. Annex II: 2007 Proposed Project Timeline January: IPHE ILC will meet at Oxford, UK, the last week of January. This is an opportunity for project staff to refine plans and consult with stakeholders. April: The first project workshop will be convened in Detroit, Michigan, US. USEA officials have generally agreed to help IEA organize workshop logistics under the IPHE Secretariat umbrella. The IEA project team, with input from participants especially DoE, will organize the workshop dialogue sessions, analytical activities, and synthesis and reporting efforts. April: IPHE SC will convene in Sao Paulo, Brazil. This is an opportunity to take stock of the Detroit workshop and make project adjustments as needed. It is also an opportunity to brief IPHE SC members regarding progress. The IPHE SC has several committees with interest or jurisdiction over the subject project. June: The second project workshop will convene in Paris, France. The IEA will be primary host for this meeting but options are being discussed. June: IPHE ILC will convene in Seoul, Korea in late June. This meeting offers the opportunity to brief IPHE colleagues on project progress and receive feedback.
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September: The third and final project workshop will convene in Japan or China. USEA and IEA officials are exploring options and opportunities. September 2007 to December 2008: The project analytical phase will expand and accelerate based on scenarios, assumptions, data analysis that is collected at the workshops. The two major project reports will be completed.
Annex III: Project Deliverables As stated previously oral and written power point presentations will be offered to the IPHE Steering Committee and Implementation Liaison Committee on a regular basis. Similar reports will be offered to IEA Committee on Energy Research and Technology and Governing Board. Interim reports will also be offered at major international conferences on request. It also anticipated that some brief project reports will be distributed in the IPHE newsletter, IEA newsletter and similar outlets during the course of the project. Project Major Written Deliverables: 1) Interim Project Report for IEA Ministerial (color, glossy booklet), May, 2007, Paris, France 2) North America Workshop Report (IEA-IPHE color, glossy booklet), June, 2007 3) Interim Project Report for German (color, glossy booklet) G8 Summit, June, 2007 4) Europe Workshop Report (IEA-IPHE color, glossy booklet), October, 2007 5) Interim Project Report at World Energy Congress, October, 2007, Rome, Italy 6) Asia Workshop Report (IEA-IPHE color, glossy booklet), December, 2007 7) Building the Hydrogen Economy: An Infrastructure Strategy Chapter in the IEA book, Energy Technology Perspectives: Scenarios and Strategies to 2050, March 2008. This is a major IEA publication that is distributed to 5000 senior officials worldwide. 8) Interim Project Report at World Hydrogen Energy Congress, Darwin, Australia, mid-2008 9) Interim Project Report for Japanese G8 Summit (color, glossy booklet), June, 2008 10) Final Report, Building the Hydrogen Economy: An Infrastructure Strategy (color, glossy book ), December, 2008 Project Workshops 1) North America Workshop, Detroit, Michigan, USA, April 2-4, 2007 2) Europe Workshop, Paris, France, June-July 2007 3) Asia Workshop, Shanghai, China, September-October 2007